What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-11 compared with 2023-09-12 · 1547 added, 1052 removed, 1065 unchanged (71% of the section changed)

35 unchanged sentences

Measures” below.

We are a provider of financial technology,

or fintech, products and services to unbanked and underbanked individuals and small

businesses, predominantly

in South Africa.

have developed and

our payment technologies,

and where possible,

utilize this technology to

provide financial and

value-added services to

our customers by

including them in the

formal financial system.

range of solutions

including transactional

accounts (banking), lending,

insurance, cash management

card acceptance, supplier payments, software services

and bill payments.

a full-service fintech platform in

our connected

ecosystem, we facilitate the digitization of commerce in our markets.

Sources of Revenue

5 unchanged sentences

and consumers;

pinned airtime

to merchants;

merchants and

consumers, and

insurance products

consumers and by selling hardware, licensing software and providing

related technology services to merchants.

by selling airtime to merchants;

by providing loans to merchants and consumers,

and insurance products to consumers

and by selling hardware, licensing software and providing related technology

services to merchants.

as a service provider whereby we

2 unchanged sentences

charging one-time

and ongoing fees for the use of the system either on

a fixed or ad valorem basis.

For instance, through

the acquisition of Connect, we

now provide cash management and payment services to merchant customers through a digital vault (safe asset) which is located at the

customer’s premises and

system either

generate processing revenue from

the provision of these services.

offer merchant customers

to platforms through

which we (a) generate

revenue from the sale

of prepaid airtime and

(b) generate fees from

distribution of VAS,

the provision of

these services.

We also offer merchant customers

access to platforms through

generate revenue

prepaid airtime

generate fees

from distribution

including prepaid

airtime, prepaid

prepaid electricity,

gaming voucher,

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also generate

card transaction

processing and

interest revenue

from qualifying

short-term loans.

The revenue and costs associated with these services and

sales are included in our merchant operating segment.

transaction processing and interest revenue from qualifying merchant customers who are able to access short-term loans.

consumers utilizing our ATM

provide consumers with

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insurance products.

also generate

consumers utilizing

costs associated

approach are reflected in our consumer operating segment.

The revenue and costs associated with this approach are

reflected in our consumer operating segment.

Developments during Fiscal 2024

Fiscal 2023 represents a milestone for Lesaka.

made significant progress in our turnaround strategy and delivered continued

growth for Lesaka despite challenging macroeconomic and socio-political

attributable to

generally discusses

results compared

2023 results.

Discussions of

results compared

2022 results can be found within our Annual Report on Form 10-K

for the year ended June 30, 2023.

Fiscal 2024 represents

a transformative year for

The continuation of

our strong and consistent

performance delivered a

robust improvement

in profitability,

and we believe

the anticipated completion

acquisition, announced

in fiscal 2024,

will facilitate

an acceleration

leading Fintech.

consistent strengthening in our financial position enables us to continue

pursuing our organic and inorganic growth strategies.

Operating income of $3.6 million (ZAR 67.3 million) improved $18.9 million (ZAR

342.6 million) compared with an operating

$15.3 million

million) during

compared with

$43.9 million (ZAR 666.8 million) during fiscal 2022.

Our Consumer Division (“Consumer”) returned to

profitability and contributed

profitability

a non-GAAP measure, of ZAR 497.6 million ($27.7 million) in fiscal 2023, compared with a Group Adjusted EBITDA loss of

attributable to

million) during fiscal 2024 compared with a net loss of $35.1 million (ZAR 629.2

million) during fiscal 2023.

Group Adjusted

EBITDA guidance,

measure, delivering

$36.9 million

fiscal 2022, demonstrating

successful execution

carefully considered

transformation

and growth strategy.

Group Adjusted EBITDA

is a non-GAAP measure,

refer to reconciliation below

at “—Results of Operations—

Use of Non-GAAP Measures”.

Our mission at Lesaka is

to enable merchants to compete and

grow, and to improve the lives of

South Africa’s grant beneficiaries

by providing access

to innovative financial

technology and value

creating solutions.

achieve this through our

vision to build

leading full-service

fintech platform

Africa, offering

ZAR, compared

million) during

demonstrating consistent

execution against our growth strategy.

Refer to reconciliation below at “—Results

of Operations—Use of Non-GAAP Measures”

a reconciliation

Adjusted EBITDA.

The continued

resilience of

a challenging

environment for

merchant and consumer customers demonstrates the value our customers

place on our services.

financial services,

including software,

underserviced consumers

merchants, improving people’s lives and

increasing financial inclusion in the markets in which we operate.

We achieved this through

our ability to efficiently digitalize commerce by providing a full-service fintech platform and facilitating the secular shift from cash to

digital that is currently taking place.

Merchant Division

The year-on-year growth achieved

by our Merchant

Division (“Merchant”) is

supported by the

robust secular trends

cash management

payment processing,

Services (“VAS”),

capital and financial services to merchants and underserved consumers.

Merchant Division outperformance

Our Merchant Division has

shown significant growth in our offering

to MSME, which is supported

by the robust secular trends

underpinning financial inclusion, cash management and digitalization

Performance in our Merchant division has been driven by:

Kazang, which is our VAS and Supplier Payments Business, has seen

strong adoption by MSMEs in

the informal sector, with

a 47% year-on-year

growth in the

number of devices

had approximately

75,000 devices deployed

30, 2023, compared to approximately 51,000 devices one year ago;

provide card acquiring

solutions in the informal

sector via Kazang

the formal sector we

provide this service

digitalization

micro-merchants,

efficiently and fulfill their potential.

Performance in Merchant has been driven by:

and supplier payments

business continues to see adoption by micro-merchants.

and supplier payments

Fiscal year ended June 30,

Approximate number of devices in deployment

Throughput for the year (ZAR billions)

international

money transfers (ZAR billions)

2024 includes approximately 6,400 devices attributable to the acquisition of Touchsides,

effective May 01, 2024, which are

not enabled for VAS

and supplier payments on the Kazang platform.

approximately

approximately 22,650 a year ago, a growth of 98% in deployed devices;

We provide merchants access to credit through Capital

Connect and Kazang Pay

We continue to see strong demand

for this merchant

credit offering

and disbursed

just over ZAR

year, compared

to approximately

0.6 billion in the comparable period last year, representing

growth of 62%.

Our automated cash management and payments business, Cash

Connect, effectively puts the “bank” in approximately

merchants’ stores (compared to approximately 4,080 merchants’

stores a year ago).

Connect is a provider of

vaults in the

formal sector,

and is building

in the informal

Cash Connect enables

base to significantly mitigate their operational risks pertaining to cash management

87,500 devices

compared to approximately 75,000

devices one year ago, and

represents a 2-year CAGR of

31% compared to

June 30, 2022.

The 87,500 devices

includes approximately 2,300 Touchsides merchants with

devices already enabled for

opportunity to deploy a Kazang device enabling VAS

sales and supplier payments.

Core to our device placement strategy

is the decision to focus on

quality business and optimizing our

fleet, which is reflected in a healthy throughput growth and margin

As previously

communicated,

money transfers

reducing significantly

regulatory environment

impacting the

industry as a

transfers comprised

payment throughput

in fiscal 2024

compared to 22% in

has had limited impact

on profitability as money

transfers are a

very low margin product.

payments throughput,

excluding the low-margin

money transfers,

increased 43%

year to ZAR 30.6 billion, and represents a 2-year CAGR of 49% compared

to June 30, 2022.

Whilst we saw growth in our traditional

products of electricity,

airtime and gaming, much of the growth

micro-merchants.

suppliers onto our platform,

we anticipate these volumes

will continue to grow.

Supplier payment throughput

volumes increased 124%

in fiscal 2024

compared to fiscal 2023

and now accounts

for approximately 35%

throughput volumes, compared to approximately 20% a year ago.

Touchsides was acquired

at the end of April 2024 (refer below).

card acceptance

solutions to micro-merchants via Kazang Pay and to merchants through Card Connect.

Card acceptance

Fiscal year ended June, 30

Approximate number of devices in deployment

Throughput for the year (ZAR billions)

solutions offered to merchants through Capital Connect

in the merchant market.

Fiscal year ended June, 30

Capital Connect credit disbursed (ZAR millions)

Capital Connect loan book

size at period end (ZAR

including higher interest rates, experienced by merchants in South

Africa during fiscal 2024

deteriorating

financial strength of many

of our merchants means they

do not meet our credit

criteria, resulting in fewer and

smaller extensions.

Whilst strict

application of

negative growth,

and maintained the quality of our book through this cycle.

Growth in credit disbursed and the Capital Connect

loan book size at the end of the year represents a 2-year CAGR of 9% and 11%

respectively.

Since inception,

Capital Connect

has distributed

merchants and can provide funding

of up to ZAR 5

million in under 24 hours.

access to affordable and

flexible opportunity

merchants’ lifecycle,

enabling them

In fiscal 2024 Capital

Connect launched

“Fuel Connect”

, a tailored lending

solution addressing complexities

in fuel ordering, aimed at solving for merchants’ pain points.

lending offering

-merchant sector,

was suspended

in early fiscal

following the decision to discontinue

the current product, especially in

the high interest rate environment.

monitoring payment

behavior on a

smaller loan book

and applying stricter

lending criteria before

relaunch later in fiscal 2025.

digitalization

approximately

Cash management and digitalization

Fiscal year ended June 30,

Approximate number of devices in deployment

business remains

vital product

merchant offering

differentiator

digitalization

micro-merchant

significantly mitigate their operational risks pertaining to cash management

and security.

Consumer Division contributing sequential positive Segment Adjusted EBITDA

and poised for growth

Over the past four quarters we have consistently referenced the

three levers underpinning our strategy of returning the Consumer

profitability

(“ARPU”) through cross-selling and cost optimization.

The progress on our three key initiatives is as follows:

towards digital payments,

most significant portion

of retail transactions

especially in informal markets.

This business is

primarily exposed to the mid-market SMEs, a

sector which has

challenges such

price inflation

bankruptcies and vault upliftments which affected

the net growth in the vault estate.

Our merchants deposited over ZAR 113 billion in cash into our vaults in fiscal 2024 evidencing the value they

derive from our ability to digitalize this cash and immediately provide access to working

Acquisition of Touchsides

In February 2024

we announced the acquisition

of Touchsides

(Pty) Ltd (“Touchsides”)

closed on April 30,

data analytics and

insights company,

complementary with

significantly expands

established solution

licensed tavern market.

provides platform-as-a-service (“PaaS”) and software-as-a-service (“SaaS”) solutions

decisions, such as pricing and promotional offers.

The data and insights gathered from these terminals carries significant value and potential to be monetized through relationships

route-to-market

Touchsides is managed

as part of our micro-merchant business and has been allocated to our Merchant operating

Acquisition of Adumo

we announced the acquisition

of Adumo RF (Pty)

Ltd (“Adumo”), which

is subject to shareholder

and regulatory

Adumo is an independent

payments and commerce enablement

platform in Southern Africa,

serving approximately 23,000 active

merchants with

operations across

South Africa,

Namibia, Botswana

decades, Adumo

has facilitated

physical and online commerce between retail merchants and end-consumers by offering

a unique combination of payment processing

and integrated software

solutions, which currently

include embedded payments,

integrated payments, reconciliation services,

lending, customer engagement tools, card issuing program management

and data analytics.

Adumo operates

businesses, which

provide payment

processing and

integrated software

Payments business offers

payment processing,

integrated payments

and reconciliation

solutions to small-

management to corporate clients such as Anglo American and Coca-Cola;

The Adumo ISV business, also known as GAAP,

has operations in South Africa, Botswana and Kenya, and clients in a

countries, and

leading provider

of integrated

point-of-sales software

industry in Southern Africa, serving clients such as KFC, McDonald’s,

Pizza Hut, Nando’s and Krispy Kreme;

business offers

online commerce

solutions (Adumo

Online), cloud-based,

multi-channel point-

(SwitchPay) to SME merchants and corporate clients in South Africa and Namibia.

Adumo generates

per transaction

are calculated

percentage of

transaction value,

and software-as-a-service (“SaaS”) subscription fees charged to

30, 2024, Adumo employed approximately

employees throughout Southern Africa.

consolidation

approximately 1.7 million

active consumers,

120,200 merchants,

and processes

in throughput

Botswana, Zambia, and Kenya.

The acquisition enhances Lesaka's strengths in both the consumer

and merchant markets.

consideration will

combination of

of 17,279,803

and a ZAR 232 million ($12.5

million, translated at the prevailing rate of

ZAR 18.5 as of

May 6, 2024) payment in cash.

Consideration,

($85.9 million),

billion)/17,279,803 /

shareholders include Apis

Growth Fund I,

a private equity

fund managed by

Apis Partners

LLP (“Apis”), African Rainbow

Capital (“ARC”), the largest

shareholder of Crossfin Holdings

(RF) Pty Ltd (“Crossfin”),

the International Finance Corporation and Adumo management.

As of September 11, 2024, the majority of shareholder and regulatory approvals required in finalizing this transaction have been

The transaction is expected

to close by October 2024 (quarter two

of fiscal 2025) once the remaining procedural

closing conditions are satisfied.

Consumer Division

transactional

improve the lives

of historically underserviced

consumers and continue

to deliver against

our strategic focus

areas underpinning our

Progress made

growing active

EasyPay Everywhere

account numbers,

(ii) increasing

cross-selling

optimization,

offering, resulted in revenue and profitability growth in

the Consumer Division in fiscal 2024.

Fiscal year ended June 30,

Transactional accounts

(banking) - EasyPay Everywhere ("EPE")

recipients (number)

Total active EPE transactional

account base at year end (millions)

transactional

recipients (millions)

Lending - EasyPay Loans

Approximate number of loans originated during the year (number)

Gross advances (ZAR billions)

Loan book size, before allowances, at year end

(ZAR millions)

Insurance - EasyPay Insurance

Approximate number of insurance policies written in the year (number)

Total active insurance

policies on book at year end (number)

Average revenue per customer per month,

30, (permanent grant

beneficiaries) (ZAR)

Gross loan book, before

The progress on our key initiatives is as follows:

Driving customer acquisition

Our total active EPE transactional account base

stood at approximately 1.3 million at

the end of June 2023,

improvement due

to various strategic

achieved approximately

326,000 gross account

activations in

the year, increasing

75% compared to approximately

186,000 in fiscal 2023.

After accounting for churn, net

account growth for the year increased 143%

to approximately 192,000 accounts, compared to approximately 79,000

in fiscal 2023.

transactional

approximately

which approximately

(or approximately

permanent grant

comprises Social

Distress (“SRD”)

recipients, which

was introduced

COVID pandemic

calendar 2023.

As of the end of June

2023, we increased our permanent grant account base by 2% on

a net basis and

recipient base has

than anticipated as

we continue to

transition the business

sales driven, customer-

centric, financial services provider.

balance comprises

Social Relief of Distress

(“SRD”) grant recipients, which was

introduced during the COVID pandemic and

in calendar year 2023.

our permanent

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base due to the temporary nature of the grant.

We continue to focus our efforts on designing and implementing products and services that we believe will enhance

the lives of these people and their families.

This in turn should improve account

activation and utilization.

Progress on cross

EasyPay Loans

We originated approximately 850,000 loans in fiscal 2023 with our net consumer loan book increasing 19% to ZAR

improve following

originated approximately

consumer loan

(“gross book”), increasing

32% to ZAR 548

million as of June

30, 2024, compared

to ZAR 415 million

amended our credit scoring or other lending criteria and the growth is reflective of the demand

cross-selling

capabilities.

rate continues

the implementation

targeted loan

campaigns over

lending campaigns and encouraging results from our digital channels during

The portfolio loss ratio

of approximately 6%,

calculated as the loans

written off during the

period as a percentage

of the total loan book,

remains encouragingly low at approximately 6% per annum.

written off during

fiscal 2024 as a percentage

of the total gross

loan book at the

end of the period,

remained stable on an

annualized basis, compared to

EasyPay Insurance

Our insurance product sales

is a material

contributor to the

improvement in our

insurance product continued

its strong growth

material contributor

to the improvement

overall ARPU.

able to improve

customer penetration

to approximately

have been able to improve customer

penetration to approximately 33% of our

active permanent

grant account

base as of June 30, 2023, compared to just below 20% as of June 30, 2022.

Over 124,700 new policies were written

during fiscal 2023, compared to approximately 27,600 in the comparable period in fiscal 2022.

The total number of

active policies has

to approximately 335,000 policies

30, 2023, compared to

grant account base

June 30, 2024,

have experienced

a reduction in

the number of

insurance claims incurred

following the cancellation

offerings and also as a result of reduction in the number of pandemic

-related deaths.

permanent client base

has increased

to approximately ZAR

fourth quarter of

from approximately ZAR 74 in the fourth quarter of fiscal 2022.

Cost optimization

Successful execution

cost optimization

initiatives has

achievement of

three consecutive

quarters of positive

Segment Adjusted EBITDA.

These initiatives included

branch rationalizations, deployment

expenditures.

infrastructure

network, as we grow our Consumer Division.

Strengthening our relationships with key

We continue to build our relationship with the South African Social Security Agency (“SASSA”) through proactive engagement

at a local, provincial, and national level.

relationships

shareholders,

participants across our industry.

compared to approximately

Approximately 170,000

new policies were

written during

fiscal 2024, increasing

37%, compared

to approximately

approximately

compared to June 30, 2023.

approximately

approximately ZAR 80 as of June 30, 2023.

Economic Environment and Impact of loadshedding

compounded by daily power

cuts (known as load-shedding

in South Africa).

disruptions adversely impact our

especially in our

Merchant Division, where

they lose valuable

trading hours if

have access to

alternative power supplies

mitigated as our customer base is geographically diversified, and the rotational nature of load-shedding results in

localized power cuts

over shorter time periods.

According to data published by EskomSePush, our customers experienced significantly higher level of load-shedding during the

first six months of calendar 2023 of just over five hours, on average, per day,

compared with just over two hours, on average,

during calendar 2022.

Specifically, these power cuts intensified during

the fourth quarter of

fiscal 2023, frequently exceeding 10 hours

This deterioration

recharge back

supplies where available.

The economic environment in South Africa remains challenging for our consumer and merchant customers.

Whilst inflation

Reserve Bank’s

target range,

the impact of

inflationary and interest

environment has

impacted consumers.

Likewise, our

merchant customers

have operated

in a challenging

environment, especially

Notwithstanding

Divisions, demonstrating the resilience of our business model which is firmly underpinned by

the relevance and value of our offering

to our target market.

business model

resilient, and

continue growing

improved Group Adjusted EBITDA.

Recent developments have bolstered confidence in our economy.

Whilst, as of the date of this Annual Report, the Reserve Bank

has not reduced interest rates, there is a

possibility that a downward cycle in interest rates will

Power cuts, or loadshedding,

has seen a marked improvement compared to last year.

South Africa recently went through more than 100 days without loadshedding.

The lead up to the

national elections in May 2024 was

a period of significant uncertainty for

South Africa.

The eventual outcome, with

a Government of National Unity being formed, was positively received by

the market, with the stock exchange reaching record highs

and the bond market recording record inflows, reflecting renewed confidence.

unemployment,

expectations.

We do not foresee

any major changes

however anticipate that

a lower interest

rate environment would

bring much needed

relief to consumers and merchants in South Africa.

Improvement in our Broad Based Black Economic

1 unchanged sentence

strategic priority

scorecard which

establishes a

objectives is

which establishes

independently

certificate that presents

BEE Contributor Status

Level, with level 1

being the highest and

“no rating” (a level

certificate that presents an entity’s BEE Contributor Status Level, with

level 1 being the highest

and “no rating” (a level

below level 8)

as the lowest.

During fiscal 2023, we

made significant progress in terms

of improving our empowerment credentials

and are pleased

independently

B-BBEE rating

various other B-BBEE initiatives and programmes being

rolled out, including our Youth

Employment Services (“YES”) programme,

we aim to achieve a level 4 rating by the end of fiscal year 2024.

Employee Share Ownership Plan (“ESOP”)

within 36 months of

the implementation of the

transaction that complies with certain

design principles.

benefit the workers

of the merged

entity and result in

them receiving a shareholding

in our company equal

in value to at

least 3% of the

issued shares in

our company as of April 14, 2022.

If within 24 months of the implementation date of the transaction, we generate a positive net profit

for three consecutive

quarters, the

that the majority

of our South African

workforce will be

eligible to participate

expect that participating

will be required

shares awarded over

time, currently

estimated at approximately

but this vesting

period, as well as other

terms of ESOP,

have not been finalized

as of the date of

filing this Annual Report

on Form 10-K and

subject to shareholder approval.

qualifying transaction under South Africa’s Broad Based Black Economic Empowerment

Act, and is a key strategic imperative for us

in achieving a target BBEE level 4 rating by 30

pleased to report that we progressed well on this

initiative and are

confident that we will achieve this condition of the Connect acquisition within

the time frames agreed.

During fiscal 2023, we made

significant progress in terms of improving our empowerment credentials and

reported that

our independently

verified B-BBEE

rating improved

simultaneously

setting out our aim to achieve a level 4 rating by the end of fiscal year 2024.

Together with various B-BBEE initiatives and programmes being rolled

out, including our Youth Employment Services (“YES”)

programme, we

achieved this

target during

independently verified

rating of level 4.

Leadership Changes in fiscal 2024

On February 29, 2024 Mr.

Chris Meyer completed his tenure as

Group CEO of Lesaka, a position he

held since July 1, 2021.

Ali Mazanderani

responsibilities

Mazanderani has been integral to the development of Lesaka’s strategy and has been a Non-Executive Director since 2020.

in leadership,

Kuben Pillay,

commenced his

Independent Director of Lesaka on February 1, 2024.

Critical Accounting Policies

3 unchanged sentences

which requires management

assets and liabilities.

events and their effects

cannot be determined with

absolute certainty,

contingent assets and liabilities.

As future events and

their effects cannot be

determined with absolute certainty,

the determination of

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of these policies

on the understandi

on the understanding

results of our operations and financial condition.

45 unchanged sentences

and estimates.

determining the fair value of reporting units for

and 2022, we considered entity-specific growth rates, future expected cash

weighted-average

comparables of the reporting units.

our estimates on assumptions

we believe to be reasonable

but that are unpredictable and

determining the fair value of reporting units for fiscal 2024, our key judgements related to reporting unit revenue growth rates and the

weighted-average cost

of capital applicable

industry comparables

of the reporting

determining the

fair value of

reporting units

considered entity-specific

growth rates,

future expected

our discounted

cash flow model, and the weighted-average cost of capital applicable to

peer and industry comparables of the reporting units.

our estimates

on assumptions

reasonable but

unpredictable and

inherently uncertain.

In addition, we make

judgments and assumptions in allocating assets

and liabilities to each of

our reporting units.

judgments and assumptions in allocating assets and liabilities to each of our reporting

The results of our impairment tests during fiscal 2024

1 unchanged sentence

their carrying

consolidated financial statements.

results of our impairment tests

during fiscal 2022

indicated that the fair value

of our reporting

units exceeded their carrying values and so did not require impairment.

our impairment

indicated that

the fair value

their carrying

discussed in Note 10 to our audited consolidated financial statements.

Intangible Assets Acquired Through Acquisitions

2 unchanged sentences

by management

purchase method

of accounting.

the acquisition

intangible assets.

used the relief

method to value

identified brands

and the multi-period

excess earnings method

integrated platform

and identified

customer relationships.

excess earnings method, the income approach and the cost approach

to value other historic acquisition-related intangible assets.

contributory asset charges, discount rates, exchange rates,

cash tax charges and useful lives.

significant intangible

assets related

acquisition in

We completed the acquisition

of Connect during fiscal 2022 where we identified and recognized intangible assets.

relief from royalty method to value identified brands

and the multi-period excess earnings method to value

the integrated platform and

identified customer relationships.

have used the relief from royalty method,

the multi-period excess earnings method, the income

acquisition-related

future revenues

the underlying

forecasts, applied

asset charges,

rates, exchange rates, cash tax charges and useful lives.

The valuations were based on information available at the

24 unchanged sentences

and service offerings.

voucher, and other services, to

The determination

of whether we

a principal or

prepaid airtime

vouchers which

distribute VAS,

including prepaid

airtime vouchers (which

inventory), prepaid electricity, gaming voucher,

and other services,

of our platforms.

determination

when providing

these services

significant amount

are primarily

responsible for

fulfilling the

promise to provide the specified goods or service, (ii) we have inventory risk before the specified good

or service has been transferred

to a customer

have discretion

in establishing

for the specified

purchase (and

inventory risk)

prepaid airtime

before selling

a significant

judgement and is based on whether (i)

we are primarily responsible for fulfilling the promise

to provide the specified goods or service,

the specified

establishing the

the specified

the principal

transaction, such

thus control and assume

inventory risk) prepaid airtime

before selling it to customers

utilizing our platform,

revenue is reported

in a transaction,

we distribute VAS

on behalf of our customers, and do not control the good or service to be provided, revenue is recognized

based on the amount that we

are contractually entitled to receive for performing the distribution

service on behalf of our customers using our platform.

revenue is reported on

transaction, such

distribute VAS

our customers,

contractually

performing the distribution service on behalf of our customers using our

of investment in Cell C

26 unchanged sentences

valued Cell C at

$0.0 (zero) as

June 30, 2023

utilized the latest approved

business plan provided

management for

ended December

valuations, and

the following

key valuation

inputs were used:

(zero) as of each of

June 30, 2024 and 2023.

We utilized the latest business plan provided by Cell

for the period ended December 31,

2027, for the June 30, 2024

and 2023 valuations, and the

following key valuation inputs were used:

Weighted Average

59 unchanged sentences

and inherently

The Company did not

identify any observable transactions during

either of the

years ended June 30,

and 2022, and therefore

change in the

fair value of

MobiKwik during

The Company did

not identify any

observable transactions

during either of

the years ended June

30, 2024, 2023

and 2022, and

therefore there was no change in

the fair value of MobiKwik

during the year.

ended June 30,

2021, MobiKwik

entered into a

number of separate

agreements with new

shareholders to raise

additional capital through the

issuance of additional

During the year ended June 30,

2021, MobiKwik entered

Specifically,

following transactions as

the basis for

our fair value

adjustments to our

investment in MobiKwik

during the year

June 30, 2021:

early November 2020, $135.54 per

(ii) in March 2021, $170.33

and (iii) in June

2021, $245.50

considered each of these transactions to

be an observable price change in

an orderly transaction for similar or

equity securities issued by MobiKwik.

the carrying value of our investment in MobiKwik increased

from $27.0 million

as of June 30, 2020, to $76.3 million as of June 30, 2021.

The change in the fair value

of MobiKwik for the year ended June 30, 2021,

operations for the year ended June 30, 2021.

identical equity

securities issued by MobiKwik

in a capital raise concluded

in June 2021, of $245.50

The carrying value

of our investment

in MobiKwik is

$76.3 million as

value of MobiKwik

is included in

the caption “Change

fair value of equity securities” in our audited consolidated statement of operations

not identify any impairment indicators

11 unchanged sentences

certain impairment

impairment tests during

and 2021, resulted

in impairments of

$1.1 million and

impairment tests

during fiscal

impairments of

million, respectively,

related to our

equity-accounted investments.

These impairments are discussed in

Note 9 to our audited consolidated financial statements.

For fiscal 2023, in determining the fair value of Finbond,

as it is listed on the Johannesburg Stock Exchange,

its market price as

of the impairment assessment dates,

adjusted for a liquidity discount

For fiscal 2021,

in determining the fair value of

of our equity-accounted investments, we

have considered (i) for Finbond

specifically, its market price as of the

impairment assessment

date, adjusted for a liquidity discount of 15%,

and (ii) the net asset

value of the equity-accounted investment being assessed as a proxy

of fair value because reasonable cash flow forecasts were not available.

base our estimates on

assumptions we believe to

be reasonable but that

are unpredictable and inherently

value of our investment in Finbond is sensitive to movements in its market price, which is quoted in ZAR, because we use the market

price as the basis of our valuation.

These impairments are discussed in Note

9 to our audited consolidated financial

10, 2023, we, through our wholly owned subsidiary

Net1 Finance Holdings (Pty) Ltd, entered into an agreement

with Finbond to sell

our remaining shareholding to Finbond for a cash consideration of ZAR 64.2

million ($3.5 million), or ZAR 0.2911 per share.

agreement to calculate

the determined fair value

fiscal 2023, in determining

the fair value of

Finbond, as it is

on the Johannesburg Stock Exchange, its market price as

of the impairment assessment dates, adjusted for a

liquidity discount of 25%.

We based our estimates on assumptions

we believe to be reasonable but that are unpredictable and inherently uncertain.

our investment

was sensitive

market price,

market price as the basis of our valuation.

Deferred Taxation

24 unchanged sentences

future taxable income

and ongoing prudent and

practicable tax planning strategies

are considered.

During fiscal 2023

and 2022, respectively we recorded

of $8.0 million

and $1.7 million,

to our valuation

allowance, and during

fiscal 2021 we

recorded a net

increase of $1.5

recorded a net decrease of $5.6 million,

$8.0 million and $1.7 million, to our

valuation allowance.

As of June 30, 2024

2023 and 2022, the valuation

allowance related to deferred

tax assets was $109.1 million

and $117.1 million,

respectively.

and 2023, the

valuation allowance related to deferred tax assets was $114.7

million and $109.1 million, respectively.

Stock-based Compensation

33 unchanged sentences

For instance,

a 5% increase (to 55%) or decrease (to 45%) in the expected volatility used (of 50%) to value stock options granted in February 2022,

a 5% increase (to 53%) or 5% decrease (to 43%) in the expected volatility used (of 48%) to value stock options granted in June 2024,

stock-based compensation

expense from continuing operations was $7.9 million, $7.3 million and $3.0

million for fiscal 2024, 2023 and 2022, respectively.

Accounts Receivable and Allowance for Doubtful Accounts Receivable

We maintain an allowance for doubtful accounts receivable

related to our Merchant

and Consumer segments with respect

services provided;

to customers;

processing services to our customers.

management’s estimate of

the recoverability of the amounts outstanding.

factors including

period outstanding,

creditworthiness

customers, past

consider this policy to be appropriate taking into account factors such as historical

bad debts, current economic trends and changes in

payment patterns.

Additional provisions

required should

make payments

Accounts Receivable and Allowance for Credit Losses

use a lifetime loss rate by expressing

write-off experience as a percentage

of corresponding invoice amounts (as

outstanding balances).

The allowance for credit losses related to these receivables has been calculated by multiplying the lifetime loss

rate with recent invoice/origination amounts.

Prior to July 1, 2023, a specific provision is established where it is considered likely that all or a portion of the amount due from

purchasing licenses

be recovered.

Non-recoverability is

assessed based

quarterly review

management of the

ageing of outstanding

amounts, the location and

the payment history of

the customer in relation

to those specific

We use historical default experience over the lifetime of loans in order to calculate a lifetime loss

rate for our lending books.

allowance for

credit losses related

finance loans receivables

is calculated by

multiplying the

lifetime loss rate

month-end outstanding lending book.

Prior to July

regularly reviewed the

ageing of outstanding

amounts due from

borrowers and adjusted

its allowance

recoverability

evaluation of the creditworthiness of each customer.

receivable and related service fees and

interest if a borrower is in arrears

with repayments for more than three months

or is deceased.

We write off merchant and working capital finance

receivables and related fees when

it is evident that

reasonable recovery procedures,

including where deemed necessary,

formal legal action, have failed.

Merchant lending

an allowance for doubtful finance loans

receivable related to our Merchant services

segment with respect to short-

to qualifying

of outstanding

The allowance for credit losses related to Merchant finance loans receivables

is calculated by adding together actual receivables

include adhering to

our proprietary lending

criteria which

online-system loan application

process, obtaining necessary

transaction-history

variety of factors such as the customer’s credit capacity and

customer-specific risk factors when originating a loan.

recently (in the past

three years) commenced lending

to merchant customers and

uses historical default experience

lifetime of loans generated thus

far in order to calculate

a lifetime loss

rate for the lending book.

The allowance for credit losses

to these merchant finance loans receivables is calculated by adding together actual receivables in default plus multiplying the lifetime

approximately 1.18%.

The performing

component (that

is, outstanding

loan payments

arrears), under-performing

(that is, outstanding loan payments that are in arrears)

and non-performing component (that is, outstanding loans

for which payments

appeared to have ceased) of the book represents approximately 84%, 15% and 1%, respectively, of the outstanding lending book as of

June 30, 2024.

July 1, 2023,

we maintained

finance loans

receivable related

to our Merchant

merchants and

an allowance is

the full amount

outstanding if

the customer is

in arrears for

that reasonable

formal legal action, have failed.

online-system

application process, obtaining necessary customer transaction-history data and credit bureau checks.

We consider these procedures to

customer-specific

factors when originating a loan.

arrears for more than 15 days.

We wrote off loans and related interest and fees when it is evident that reasonable recovery procedures,

including where deemed necessary,

formal legal action, had failed.

Consumer microlending

We maintain an allowance for doubtful finance

loans receivable related to our Consumer services segment with respect to short-

term loans to qualifying customers.

Our policy is to

regularly review the ageing

of outstanding amounts due from

borrowers and adjust

the provision based on management’s

estimate of the recoverability of finance loans receivable.

write off microlending loans and

related service fees if a borrower is in arrears with repayments for more than three months or

Credit bureau checks as well as an affordability test are

conducted as part of the origination process, both of which being in

with local regulations.

We consider this policy to be appropriate because the affordability

test we perform takes into account a variety

required should the ability of our customers to make payments when

due deteriorates in the future.

A significant amount of

is required to assess the ultimate recoverability of these

finance loan receivables, including ongoing evaluation of the creditworthiness

of each customer.

The allowance for credit

losses related to Consumer finance

loans receivables is calculated

by multiplying the lifetime

originated having a

tenor of six months.

Credit bureau checks

as well as an

affordability test are

conducted as part

of the origination

process, both

local regulations.

consider this

be appropriate

affordability

performs takes into account a variety of factors such

as other debts and total expenditures on normal

household and lifestyle expenses.

Additional allowances

required should

make payments

deteriorate in

significant amount

of judgment is

assess the ultimate

recoverability of

these finance loan

receivables, including

evaluation of the creditworthiness of each customer.

have operated this

lending book for

more than five

years and use

historical default experience

over the lifetime

order to calculate a lifetime loss rate for the lending book.

analyze this lending book as a single portfolio because the loans within

the portfolio

have similar characteristics

and management

uses similar processes

and assess the

credit risk of

The allowance for credit losses related to these microlending finance loans receivables is calculated

by multiplying the lifetime

loss rate with the month end outstanding lending book.

lifetime loss rate as of each

of July 1, 2023 and June 30, 2024,

The performing

loan payments

lending book as of June 30, 2024.

Prior to July

maintained an allowance

for credit losses

- finance loans

receivable related to

our Consumer services

segment with respect

to short-term loans

to qualifying customers.

Our policy was

to regularly review

of outstanding amounts

borrowers and

provision based

on management’s

the recoverability

loans receivable.

wrote off microlending loans and related service fees if

a borrower is in arrears with repayments for more than three months or dies.

Recent Accounting Pronouncements

31 unchanged sentences

Balance sheet items:

We have translated the results of operations and operating segment information for the year

ended June 30, 2024, provided in the

actual average

exchange rates

the reconciliation

information presented to our chief operating

decision maker.

The impact of

using this method compared with the average rate

quarter and year to date is not significant, however, it does result in minor differences.

We believe that presentation using

information presented in our

external financial reporting and

leads to fewer

differences between our external reporting

measures which

are supplementally presented in ZAR, and our internal management

information, which is also presented in ZAR.

Results of operations

The discussion

consolidated overall

5 unchanged sentences

presented in the audited consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the

entities which contribute the majority of our results and is the currency

in which the majority of our transactions are initially incurred

entities which contribute the majority of our results and is the currency in which

the majority of our transactions are initially incurred

fluctuations between

12 unchanged sentences

total operating segment revenue and

as the reconciliation because our segment performance measure and net loss before tax (benefits) expense, is presented in our audited

consolidated financial

statements in

chief operating

decision maker

(“EBITDA”), adjusted for

items mentioned in

the next sentence

(“Segment Adjusted EBITDA”)

for each operating

revenue, as well

as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our audited

consolidated financial statements in Note

21 to those statements.

Our chief operating

decision maker was our Group Chief

Officer until

February 29, 2024

our Executive Chairman

since March 1,

2024, and our

Group Chief Executive

evaluated and our

Executive Chairman evaluates,

respectively,

segment performance based

on segment earnings

before interest, tax,

and amortization

items mentioned

next sentence

(“Segment Adjusted

each operating

do not allocate

once-off items

(as defined below),

stock-based compensation

charges, depreciation

amortization,

goodwill or other intangible

assets, certain lease charges

(“Lease adjustments”), other

items (including gains or

losses on disposal of

investments, fair value adjustments to equity securities, fair value adjustments to currency options), interest

income, interest expense,

equity-accounted investments

reportable segments.

items represents

non-recurring

expense items, including costs related to acquisitions and

transactions consummated or ultimately not pursued.

reflect lease charges and the Stock-based compensation adjustments reflect stock-based

compensation expense and are both excluded

segments’ Segment Adjusted EBITDA to our loss before income tax

Operations—Use of Non-GAAP Measures” below.

Fiscal 2023 includes

intangible assets,

(“Lease expenses”),

adjustments to

securities, fair

interest income, interest expense, income tax expense or loss

from equity-accounted investments to our reportable segments.

items represents non-recurring expense

items, including costs related to

acquisitions and transactions consummated

or ultimately not

expenses reflect lease

expenses (refer to

our audited consolidated

financial statements)

and the Stock-

based compensation

adjustments reflect

stock-based compensation

excluded from

the calculation

Adjusted EBITDA and

are therefore reported

as reconciling items to

reconcile the reportable

segments’ Segment Adjusted

to our loss before income tax expense.

Group Adjusted

EBITDA represents

Adjusted EBITDA

after deducting

Lease expenses

“Results of Operations—Use of Non-GAAP Measures” below.

and 2023 includes

the entire fiscal

fiscal 2022 includes

consolidation of

April 14, 2022.

includes consolidation

Refer also to Note 3 to the audited consolidated financial statements for

8 unchanged sentences

operating segments,

any inter-segment

eliminations, are

Inter-segment revenue

eliminations are

Eliminations.

well as any inter-segment eliminations, are included in Group costs.

Inter-segment revenue eliminations are included

in Eliminations.

Fiscal 2024 Compared to Fiscal 2023

3 unchanged sentences

operations during fiscal 2024

2023 as compared

with the same

as compared with

the same period

in the prior year:

Higher revenue:

Our revenues increased by 11.4% in ZAR, primarily due to an increase in low margin prepaid airtime sales

and other value-added

services, as well as

higher transaction, insurance

and lending revenues, which

was partially offset

lower hardware sales revenue in our POS hardware distribution business given

the lumpy nature of bulk sales;

profitability

various cost reduction initiatives in Consumer implemented in prior periods as well as the contribution

from Connect;

Higher net interest charge:

The net interest

charge increased to

million from ZAR 299.9

million primarily due

to higher interest rates;

Significant transaction costs:

We expensed $2.3 million of transaction costs related to the Adumo transaction in fiscal 2024;

Foreign exchange movements:

dollar was 4.1% stronger against the ZAR during fiscal

2024 compared to the prior

period, which adversely impacted our U.S.

dollar reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S.

The following tables show the changes in the items comprising our statements of operations,

dollars and in ZAR:

ended June 30,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Impairment loss

Transaction costs related to Adumo transaction

Operating income (loss)

Reversal of allowance for EMI doubtful debt receivable

Loss on disposal of equity-accounted investment

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

In South African Rand

ended June 30,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Impairment loss

Transaction costs related to Adumo transaction

Operating income (loss)

Reversal of allowance for EMI doubtful debt receivable

Loss on disposal of equity-accounted investment

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

Revenue increased by $36.3 million (ZAR 1.1 billion), or 6.9% (in ZAR, 11.4%),

primarily due to the increase in the number of

transaction volumes processed, insurance premiums collected

and lending revenues following an increase in loan

originations, which

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

Refer to discussion above at “—Recent Developments”

for a description of key trends impacting our revenue this fiscal year.

Cost of goods sold, IT processing, servicing and

support increased by $25.1 million (ZAR

0.8 billion), or 6.0% (in ZAR,

primarily due to

the increase in low

margin prepaid airtime

sales, which were

partially offset by

the lower cost of

goods sold related

to fewer hardware sales.

Selling, general and

administration expenses decreased

by $3.0 million

(in USD 3.2%),

and increased by

ZAR 15.4 million

was primarily

higher employee

-related expenses

senior management team and the year-over-year

impact of inflationary increases on employee-related

expenses, which were partially

offset by the benefits of various cost reduction initiatives in Consumer

Depreciation and amortization expense decreased by $0.02

million (in USD, 0.1%),

and increased by ZAR 17.7 million

In ZAR, the increase was due to an increase in depreciation expense related to additional POS devices

During fiscal 2023, we

recorded an impairment loss

of $7.0 million related

to the impairment of

our hardware/ software supply

regarding these impairment losses.

Transaction costs related to Adumo

acquisition includes fees

paid to external

service providers associated

with legal, commercial,

financial and tax due

diligence activities performed,

fees paid to legal advisors

to draft the purchase

agreement as well as

and advisory services procured related to the transaction.

Our operating income

(loss) margin in

fiscal 2024 and 2023

was 0.6% and (2.9%),

respectively.

discuss the components of

operating loss margin under “—Results of operations

by operating segment.”

respectively.

to carry our investment

in Cell C at $0

Refer to Note

9 to our consolidated financial

statements for

the methodology

and inputs used

value calculation for

MobiKwik and Note

methodology and

inputs used in

fair value calculation for Cell C.

During fiscal 2024, we

received an outstanding amount

of $0.3 million related

of Carbon in fiscal

2023, which resulted

in the reversal

of an allowance

loans receivable

million recorded

in fiscal 2023.

million comprising a

loss of $0.4 million

related to the disposal of

a minor portion of

our investment in Finbond

and a $0.25 million

gain related to the disposal of our entire interest in Carbon during fiscal 2023.

to Note 9 to our consolidated financial statements

for additional information regarding these disposals.

million) from

million), primarily

higher interest rates.

Interest expense increased

to $18.9 million

(ZAR 354.0 million)

from $18.6 million

(ZAR 333.1 million),

primarily as a

of higher overall

interest rates and

higher overall borrowings

during fiscal 2024

compared with comparable

period in the

which was partially offset by lower interest

expense incurred on certain of our borrowings

for which we were able to negotiate lower

rates of interest during the latter half of fiscal 2023 and again towards the end

of calendar 2023.

Fiscal 2024 tax

expense was $3.4

million (ZAR 62.6

million) compared to

a tax benefit

of $(2.3) million

(ZAR (41.4) million)

operations, a

benefit related

to acquisition-related

intangible asset

amortization, non-deductible

expenses, the

losses incurred by certain

of our South African businesses and

the associated valuation allowances created

related to the deferred tax

assets recognized regarding net operating losses incurred by these entities.

Our effective

fiscal 2024 was impacted

by a reduction

in the enacted

South African corporate

income tax rate from

28% to 27% from January 2023 (but backdated to July 1, 2022), the tax expense recorded by our profitable South African operations,

acquisition-related

amortization,

non-deductible

related to an expense paid by Connect before

we acquired the business and which subsequently has been

determined to be deductible

tax purposes,

losses incurred

businesses and

the associated

created related to the deferred tax assets recognized regarding net operating

losses incurred by these entities.

Finbond is listed on the Johannesburg Stock Exchange

and reports its six-month results during

our first half and its

annual results

during our fourth quarter.

our entire remaining interest in

Finbond during the second

quarter of fiscal 2024.

impairment loss related to our

investment in Finbond in fiscal

2024 as the carrying value

of Finbond exceeded the fair

value of holding

referenced in

2023 agreement

with Finbond.

also recorded

impairment loss in fiscal 202

following on-going losses reported

by Finbond and its lower

listed share price.

Refer to Note 9 to

consolidated financial statements for additional information

regarding the impairments.

The table below

presents the relative loss

our equity accounted investments:

ended June 30,

Share of net (loss) income

Share of net income (loss)

loss from equity-accounted investment

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating

(loss) income are illustrated below:

ended June 30,

Operating Segment

Consolidated revenue:

Operating segments

Not allocated to operating segments

Corporate/Eliminations

consolidated revenue

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

(1) Segment Adjusted EBITDA for Merchant includes retrenchments costs of $0.3 million and Consumer includes retrenchment

costs of $0.2 million for fiscal 2024.

(2) Lease expenses

which were previously

excluded from the

calculation of Group

Adjusted EBITDA have

now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below

at “—Results of Operations—Use of Non-

GAAP Measures”.

In South African Rand

ended June 30,

Operating Segment

Consolidated revenue:

Operating segments

Not allocated to operating segments

Corporate/Eliminations

consolidated revenue

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

retrenchments

retrenchment costs of ZAR 3.5 million for fiscal 2024.

(2) Lease expenses

which were previously

excluded from the

calculation of Group

Adjusted EBITDA have

now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

GAAP Measures”.

Segment revenue increased due to the increase in prepaid airtime vouchers

sold and other value-added services provided, which

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

lower revenue

services transaction

volumes processed

international money transfers).

In ZAR, the increase in Segment Adjusted EBITDA

is primarily due to the higher sales activity, which

was partially offset by lower hardware sales

Prepaid airtime sales

In South Africa and other countries, mobile network operators (“MNOs”) offer prepaid or contract (or postpaid) services to their

customers to telephony

services using a

mobile telephony network

also offer similar

products (prepaid or

for mobile data

which uses other

wireless network protocols

such as wireless

fidelity (“wifi”).

“prepaid airtime”

include both of these prepaid products.

Generally speaking, the difference between the two

models is that prepaid is

paid for upfront by the

customer and contract is paid

MNOs sell prepaid products directly to their customers and also indirectly

to their customers through distribution channels

(which include wholesalers, retailers and other parties, including ourselves).

a variety of products through our

distribution channels, including prepaid airtime,

prepaid electricity,

gaming vouchers.

We refer to these

products collectively as VAS.

In order to “load” airtime onto

a mobile device an MNOs customer

requires a prepaid airtime voucher.

A unique code is

to each prepaid

airtime voucher and

is required to

activate the prepaid

mobile device.

certain tangible goods,

customers cannot

return prepaid

airtime vouchers

to us (except

service provided

which rarely occurs).

agreed quantity

airtime vouchers

upfront directly

wholesalers or

other parties

called “Pinned airtime” - these electronic vouchers are stored

on a server owned and maintained by us and we treat

these vouchers as

merchants) as the airtime is sold by the merchant to MNOs customers (so called Pinless airtime).

Adjusted EBITDA

(loss) margin

(calculated as

Segment Adjusted

EBITDA (loss)

2024 and 2023 was 6.7% and 7.2%, respectively.

Segment revenue increased

primarily due to

more transaction fees

generated from the

higher EPE account

holders base, higher

insurance revenues, and an increase

in lending revenue as

a result of an

increase in loan originations.

This increase in revenue,

with the cost reduction

initiatives initiated in fiscal

2022 and through

fiscal 2023, have

translated into a turnaround

in the Consumer

the realization

positive Segment

Adjusted EBITDA

2024 compared

Segment Adjusted

EBITDA during

higher credit

of an increase

in originations)

and higher insurance-related claims (as a result of a higher number of

insurance policies) compared with fiscal 2023.

Our Segment Adjusted EBITDA margin in fiscal 2024

was 21.2% and 5.3%, respectively.

costs primarily

include employee

related costs

specifically hired

Sarbanes-Oxley

employee directors’ fees;

group and US-listed related audit

and directors’ and officers’ insurance premiums.

Our group costs for

fiscal 2024 decreased compared

with the prior period

due to lower external

audit, legal and consulting

and lower provision for executive bonuses, which was partially offset

by higher employee costs and travel expenses.

Fiscal 2023 Compared to Fiscal 2022

The following factors had

a significant influence on

our results of

operations during fiscal

2023 as compared with

the same period

in the prior year:

Higher revenue:

ZAR, primarily

18 unchanged sentences

reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S.

The following tables show the changes in the items comprising our statements of operations,

The following tables show the changes in the items comprising our statements of

operations, both in U.S.

dollars and in ZAR:

56 unchanged sentences

amortization expense

increased by $16.1

million (ZAR 0.3

billion), or 212.7%

(in ZAR, 269.1%),

inclusion of acquisition-related intangible asset amortization related

to intangible assets identified pursuant to

the Connect acquisition,

as well as the inclusion of depreciation expense related to Connect’s

property, plant and equipment.

$16.1 million

ZAR, 269.1%),

acquisition-related

acquisition, as well as the inclusion of depreciation expense related to

Connect’s property,

plant and equipment.

During fiscal 2023, we

37 unchanged sentences

fair value calculation for Cell C.

Gain related to fair value adjustment to currency

options represents the realized gain related to foreign exchange

Gain related to fair value adjustment to currency options

represents the realized gain related to foreign exchange

option contracts

14 unchanged sentences

during fiscal 2023.

a loss of $0.4 million related to the disposal

of a minor portion of our investment in Finbond during fiscal

Refer to Note 9 to our

a loss of $0.4

million related to the disposal of a minor portion of our

investment in Finbond during fiscal 2022.

Refer to Note 9 to

consolidated financial statements for additional information regarding

55 unchanged sentences

Share of net (loss) income

Share of net income (loss)

loss from equity-accounted investment

Share of net loss

loss from equity-accounted investments

Results of operations by operating segment

9 unchanged sentences

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

1 unchanged sentence

cost of $5.9 million.

(2) Lease expenses which were previously excluded from the calculation of

Group Adjusted EBITDA have now been included in the

This change is in response to comments received from the staff

of the SEC in March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation

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Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

1 unchanged sentence

reorganization cost of ZAR 89.6 million.

(2) Lease expenses

which were previously

excluded from the

calculation of Group

Adjusted EBITDA have

now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA

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charge, in fiscal 2023 compared with fiscal 2022.

costs primarily

include employee

related costs

specifically hired

Sarbanes-Oxley

employee directors’ fees;

group and US-listed related audit

and directors’ and officers’ insurance premiums.

directors’ and officers’ insurance premiums.

Fiscal 2022 Compared to Fiscal 2021

The following factors had

a significant influence on

our results of

operations during fiscal

2022 as compared with

the same period

in the prior year:

Higher revenue:

Our revenues increased

ZAR, primarily due

to the contribution

from Connect, an

Lower operating

losses decreased,

an improvement

implementation of

various cost reduction

initiatives in our

Consumer business,

which was partially

an increase in

reorganization

charge of $5.9 million related to the retrenchment process we

commenced in January 2022;

Significant transaction costs:

We expensed $6.0 million of transaction

costs related to

the Connect acquisition in

Foreign exchange movements:

dollar was 3.3% stronger

against the ZAR during fiscal 2022,

which impacted our

reported results.

The following tables show the changes in the items comprising our statements of

operations, both in U.S.

dollars and in ZAR:

ended June 30,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Reorganization costs

Transaction costs related to Connect acquisition

Operating loss

Change in fair value of equity securities

Gain related to fair value adjustment to currency options

Loss on disposal of equity-accounted investment

Gain on disposal of equity securities

Loss on disposal of equity-accounted investment - Bank Frick

Interest income

Interest expense

Loss before income tax expense

Income tax expense

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

In South African Rand

ended June 30,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Reorganization costs

Transaction costs related to Connect acquisition

Operating loss

Change in fair value of equity securities

Gain related to fair value adjustment to currency options

Loss on disposal of equity-accounted investment

Gain on disposal of equity securities

Loss on disposal of equity-accounted investment - Bank Frick

Interest income

Interest expense

Loss before income tax expense

Income tax expense

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

Revenue increased

1.3 billion),

64.6%), primarily

the inclusion

substantial low

margin prepaid

airtime sales

core processing

hardware sales,

increase in merchant transaction processing fees, and moderate increases in lending

and insurance revenues.

Cost of goods

sold, IT processing,

servicing and support

increased by $72.1

million (ZAR 1.0

billion), or 74.9%

(in ZAR, 69.1%),

primarily due

sales, higher

costs related

to transaction

increase in insurance-related claims experience, which

were partially offset by the benefits of various cost reduction

initiatives in our

Consumer business.

Selling, general and administration expenses decreased by $9.1

million (ZAR 0.2 billion), or 10.8% (in ZAR, 13.7%), primarily

recalibration, in June 2022, of

our allowance for doubtful microlending finance loans

receivable, in our Consumer business, from 10%

outstanding to

reductions were partially offset by the

inclusion of expenses related to

Connect’s operations, higher employee-related expenses related

year-over-year

employee-related

Depreciation and amortization expense increased by $3.2 million (ZAR 46.8 million), or 74.3% (in ZAR, 68.5%),

increased due

acquisition-related

acquisition, as well as the inclusion of depreciation expense related to

Connect’s property,

plant and equipment.

We embarked on a retrenchment process on January 10, 2022, and incurred reorganization expenses of $5.9 million during

costs related

negotiations;

finance advisory

financial and

diligence activities

and indemnity

insurance related

other advisory

services procured;

competition authorities related to the regulatory filings made in various jurisdictions

Our operating loss margin

in fiscal 2022 and 2021

respectively.

for the restructuring and

transaction costs incurred, the underlying

operating loss margin in fiscal

2022 was (12.7%).

discuss the components of operating

loss margin under “—Results of operations by operating

carry our investment

at $0 (zero).

Refer to Note

consolidated financial

statements for

the methodology

and inputs used

value calculation for

MobiKwik and Note

methodology and

inputs used in

fair value calculation for Cell C.

Gain related to fair value adjustment to currency

options represents the realized gain related to foreign exchange

option contracts

entered into in November 2021

in order to manage the risk of

currency volatility and to fix

the USD amount to be utilized

the Connect purchase

consideration settlement.

foreign exchange

option contracts matured

on February 24,

6 to our consolidated financial statements for additional information

related to these currency options.

a gain of $0.7 million related to the disposal of our

entire interest in an equity security during fiscal 2022.

Note 9 to our consolidated financial statements for additional information

regarding this gain.

million related

our investment

during fiscal

Refer to Note 9 to our consolidated financial statements for additional information

regarding these disposals.

a loss of $0.5 million related to the disposal of Bank Frick during fiscal 2021.

Interest on surplus cash decreased to $2.1 million (ZAR

31.7 million) from $2.4 million (ZAR 38.0 million),

primarily due to the

utilization of a significant portion

of our surplus cash

reserves to acquire Connect as

well as lower average daily

cash balances in fiscal

expense increased

88.6) million

46.9 million),

the acquisition

incurred in Connect to fund our cash management, digitization and VAS offerings, and a higher utilization of our facilities to fund our

Fiscal 2022 tax expense

was $0.3 million (ZAR

5.0 million) compared

to $7.6 million (ZAR

118.8 million)

in fiscal 2021.

effective tax rate for fiscal 2022 was impacted

by the tax expense recorded by our profitable South

African operations, a deferred tax

benefit related to acquisition-related intangible asset amortization, non-deductible expenses (including transaction expenses related to

allowances created related to the deferred tax assets recognized regarding

net operating losses incurred by these entities.

Our effective tax rate for fiscal 2021 was

impacted by the tax effect on the

change in the fair value

of our equity securities, which

African operations,

deductible expenses, the on-going losses incurred by certain of our

South African businesses and the associated valuation allowances

created related to the deferred

tax assets recognized regarding net

operating losses incurred by these

entities, which was partially offset

by the reversal of the deferred tax liability related to one of our equity-accounted

investments following its impairment.

The disposal of certain of our equity-accounted investments in

fiscal 2021, as well as a number of impairments,

has impacted the

comparability of our

equity-accounted investments.

We disposed of

our investment

in Bank Frick

an impairment loss related to our investment in Finbond in fiscal 2021

following a slow-down in its business activity and lower listed

Refer to Note 9

to our audited consolidated financial statements

for additional information regarding our equity-accounted

investments, including disclosure regarding the disposals and impairments.

The table below presents the relative loss from our equity accounted investments:

ended June 30,

Share of net (loss) income

Share of net income

Share of net loss

loss from equity-accounted investments

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to

operating income are illustrated below:

ended June 30,

Operating Segment

Consolidated revenue:

Operating segments

Not allocated to operating segments

Corporate/Eliminations

consolidated revenue

Group Adjusted EBITDA:

Not allocated to operating segments

Group Adjusted EBITDA (non-GAAP)

(1) Consumer Segment Adjustment EBITDA for fiscal 2022 includes

reorganization cost of $5.9 million.

(2) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

GAAP Measures”.

In South African Rand

ended June 30,

Operating Segment

Consolidated revenue:

Operating segments

Not allocated to operating segments

Corporate/Eliminations

consolidated revenue

Group Adjusted EBITDA:

Not allocated to operating segments

Group Adjusted EBITDA (non-GAAP)

(1) Consumer Segment Adjustment EBITDA for fiscal 2022 includes

reorganization cost of ZAR 89.6 million.

(2) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

GAAP Measures”.

Segment revenue

increased due

processing fees.

increase in Segment

Adjusted EBITDA is

primarily due to

the inclusion of

Connect, which was

partially offset

by higher costs related

to processing fees

and higher employee-related expenses.

records a significant proportion

of its airtime

sales in revenue

sales, while only

earning a relatively

small margin.

This depresses

the Segment Adjusted EBITDA

shown by the business.

Our Segment Adjusted EBITDA margin for fiscal 2022

was 8.1% and 8.6%, respectively.

The underlying decrease in revenue was primarily due to

lower processing fees, partially offset by higher insurance

retrenchment process

statements for

additional information

regarding this

Segment Adjusted

excluding the

reorganization charge,

implementation

recalibration,

allowance for doubtful microlending finance loans receivable from 10% of the lending book outstanding to 6.5% of the lending book,

which resulted in a release from the allowance in

fiscal 2022, which decreases were partially offset by an increase in

insurance-related

claims experience.

Our Segment Adjusted EBITDA

loss margin for fiscal

(39.2%), respectively.

After adjusting

for the reorganization

charge our fiscal 2022

Segment Adjusted EBITDA loss

margin was (23.9%)

believe that the presentation

of our Segment Adjusted EBITDA loss margin before

the reorganization charge is useful to investors to understand

the improvement

in the operating performance in Consumer, before

the reorganization charge, in fiscal 2022

compared with fiscal 2021.

Our group costs increased primarily due to higher employee

costs, an increase in audit fees and directors’

and officers’

Use of Non-GAAP Measures

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understanding

performance and

trends in our

business because

it excludes certain

non-cash expenses

(including depreciation

and amortization

stock-based compensation charges) and income

and expenses that we consider once-off in nature.

Non-GAAP Measures

2 unchanged sentences

fair value adjustments to currency

options), (earnings) loss from

equity-accounted investments, stock-based compensation charges, lease

adjustments and once-off items.

non-recurring

acquisitions and transactions consummated or ultimately not pursued.

options), (earnings)

equity-accounted investments,

stock-based compensation

represents non-recurring income and

expense items, including

costs related to

acquisitions and transactions consummated

or ultimately

Lease expenses

previously excluded

calculation of

Group Adjusted

the calculation.

change is in response

to comments received from

the staff of the

SEC in March 2024

regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

The table below presents the reconciliation between GAAP net loss attributable

4 unchanged sentences

Net loss before loss from equity-accounted investments

Income tax (benefit) expense

Income tax expense (benefit)

Loss before income tax expense

1 unchanged sentence

Interest income

Reversal of allowance for doubtful EMI loan receivable

Gain on disposal of equity securities

Net loss on disposal of equity-accounted investment

Loss on sale of Bank Frick

Gain related to fair value adjustment to currency options

Change in fair value of equity securities

Operating loss

3 unchanged sentences

Stock-based compensation charges

Lease adjustments

Once-off items

1 unchanged sentence

Group Adjusted EBITDA - Non-GAAP

(A) As noted in

footnote (3) to table

Lease expenses which

were previously excluded

from the calculation of

Adjusted EBITDA have now been included in the calculation.

(1) The table below presents the components of once-off

1 unchanged sentence

ended June 30,

Transaction costs related to Adumo transaction

Transaction costs

(Income recognized) Expenses incurred related to closure of legacy

Non-recurring revenue not allocated to segments

Employee misappropriation of company funds

Transaction costs

Expenses incurred related to closure of legacy businesses

Indirect taxes provision

1 unchanged sentence

Legacy processing adjustments

Allowance for doubtful EMI loans receivable

Total once-off

6 unchanged sentences

The transactions can span

multiple quarters, for instance in fiscal 2022 we

incurred significant transaction costs related to the acquisition Connect over

of quarters, and the transactions are generally non-recurring.

Non-recurring revenue not

allocated to segments

includes once off

revenue recognized that

we believe does

not relate to

misappropriation of

company funds

loss incurred.

deregistering/ liquidation

and therefore we

consider these costs non-operational

number of quarters, and the transactions are generally non-recurring.

currency translation

deconsolidation

costs incurred

to subsidiaries

in the process of

deregistering/ liquidation and

therefore we consider

these costs non-operational

and ad hoc in

provision includes

non-recurring indirect taxes

which have been

provided related to

prior periods following

investigation from a

tax authority.

incurred separation

costs related

termination of

certain senior-level

employees, including

managers, during

Non-recurring revenue

not allocated

includes once

recognized that

misappropriation

provision includes non-recurring indirect taxes which have been provided related to prior periods following an on-going investigation

from a tax authority.

incurred separation costs related to the termination of certain senior-level employees, including an executive

senior managers,

and we consider

these specific

2 unchanged sentences

legacy processing

adjustments represents amounts we

identified during fiscal 2022

related to prior

periods that are

payable to third

The allowance

receivable relates

loan provided

accounted investments.

adjustments represents

identified during

prior periods

Liquidity and Capital Resources

4 unchanged sentences

of ZAR-denominated

0.6 million ($29.2

million), U.S.

dollar-denominated

balances of $4.5

million, and other

currency deposits, primarily

$1.8 million,

all amounts translated

rates applicable

Botswana pula, of

$1.7 million, all

amounts translated at

exchange rates applicable as

The increase in

our unrestricted

borrowings, fully settle our revolving credit facility, purchase ATMs

and safe assets, and to make an investment in working capital in

contribution from Connect and certain of our Consumer operations.

cash balances from June 30, 2023, was primarily due to a positive contribution from our Merchant

and Consumer operations, the sale

borrowings facilities

certain components

operations, which

was partially

the utilization

fund certain scheduled and

other repayments of our borrowings,

pay transaction related expenses,

purchase ATMs

and vaults, and to

make an investment in working capital.

invest any surplus cash held by our

52 unchanged sentences

Long-term borrowings

aggregate long-term borrowing

outstanding of ZAR 2.5 billion

($133.1 million translated at exchange

rates as of June

We have aggregate long-term

outstanding of ZAR 2.6 billion ($143.2 million translated at exchange rates as of June

described in Note

3 unchanged sentences

obtained by Lesaka

arrangements were amended

in March 2023

ZAR 200 million

revolving credit facility.

The revolving credit

been repaid in full as of June 30, 2023, and the entire balance is available for utilization.

In contemplation of the Connect transaction,

Connect obtained

total facilities

of approximately

billion, which

were utilized

portion of its capital expenditures and to settle obligations under the transaction documents, and which has subsequently been upsized

credit facility.

available for utilization in the future.

In contemplation of

the Connect transaction, Connect obtained total facilities of ZAR

repay its existing

borrowings, to

expenditures and

obligations under

transaction documents,

and which has

subsequently been

upsized for its

operational requirements

an outstanding

credit facility, of ZAR 300.0 million

which is utilized to fund a portion of our merchant finance loans receivable book.

outstanding balance

of June 30, 2024, of ZAR 1.2

billion, We also have a revolving credit facility, of ZAR 300.0 million which is utilized to fund a

of our merchant finance loans receivable book.

Restricted cash

9 unchanged sentences

of approximately

cash withdrawn

considered restricted as to use and therefore is classified as restricted cash on

13 unchanged sentences

Cash flows from operating activities

operating activities

during fiscal

537.9 million)

(ZAR 7.4 million) during fiscal

Excluding the impact of

income taxes, our cash

provided by operating activities during

2024 was positively impacted by the contribution from Merchant and

Consumer, the sale of Cell C inventory and temporary

capital movements within

our merchant business

of quarter-end

transaction processing activities

which were settled in the following week, which was partially offset

by growth in our consumer finance loans receivable book.

Net cash provided

1 unchanged sentence

during fiscal

was $0.4 million

(ZAR 7.4 million)

net cash utilized

2023 was $0.4

million (ZAR 7.4

million) compared

provided by operating activities

during fiscal 2023

was impacted by

the positive contribution from

Connect and certain

business within

during fiscal 2023 was

impacted by the positive

contribution from Connect and

certain business within

business, which was

14 unchanged sentences

Certain of these

purchases were funded from our borrowing arrangements and the

impact of the funding is included in financing activities.

Net cash used in operating activities during fiscal 2022 was $37.2 million (ZAR 565.3 million) compared to $58.4 million (ZAR

887.1 million) generated during fiscal

Excluding the impact of income

taxes, our cash used in operating activities during

2022 was impacted by

the cash losses incurred by

the majority of our

continuing operations, the reorganization

costs paid during the

third quarter of

fiscal 2022, and

transactions costs paid

related to our

acquisition of Connect.

In fiscal 2022,

we absorbed $5

into working capital compared to a $4.7 million release from working capital

in fiscal 2021.

purchases were funded from our borrowing arrangements and the impact

of the funding is included in financing activities.

During fiscal 2024,

8 unchanged sentences

of $2.9 million (ZAR

related to our 2023 tax

year and received tax refunds

of $0.2 million (ZAR (3.8)

related to our 2024

tax year and received

tax refunds of $0.04

million (ZAR 0.8 million).

also paid taxes totaling

$0.4 million in

other tax jurisdictions, primarily in the Botswana.

5 unchanged sentences

related to our

2023 tax year.

During fiscal 2023,

our second provisional South

African tax payments of

$4.1 million (ZAR 76.1

related to our

2023 tax year

tax refunds of

$0.2 million (ZAR

3.8 million).

also paid taxes

totaling $0.4

other tax jurisdictions, primarily in the Botswana.

During fiscal 2022,

first provisional South

African tax payments

of $0.6 million

(ZAR 9.1 million)

related to our

During fiscal 2022, we

4 unchanged sentences

0.02 million) related to our 2021 tax year.

During fiscal 2021, we made our first provisional South

African tax payments

of $0.8 million (ZAR 11.9 million)

related to our

During fiscal 2021, we also

made our second provisional South African

of $0.5 million (ZAR 8.0

related to our 2021 tax year and made an additional

tax payment of $0.8 million (ZAR 11.6

million) related to our 2020 tax year.

also paid taxes totaling $4.3 million in other tax jurisdictions, primarily in the U.S.

Taxes paid during

11 unchanged sentences

fiscal 2025, however, the amount was not quantifiable

as of the date of the filing of this Annual Report on Form 10-K.

as of the date of the filing of this Annual Report.

Cash flows from investing activities

4 unchanged sentences

million), primarily

remaining interest in Finbond and $0.25 million related to the second (and final) tranche from the

disposal of our entire equity interest

activities for

included capital

expenditures of

$16.2 million

million), primarily

acquisition of ATMs

23 unchanged sentences

and $0.7 million, respectively, related to the sale of minor positions in Finbond and from the disposal of our entire interest in Revix in

approximately

the acquisition

which largely comprised a fleet of customized mobile ATMs

used to deliver a service to rural communities, computer equipment

leasehold improvements in South

In February 2021, we disposed

of our investment in Bank

Frick and received $18.6 million

of the $30.0 million

sales proceeds, the remainder

of which was expected

to be received in

fiscal 2022 and 2023.

received $20.1

million in September 2020 related to the sale of our South Korean

business in fiscal 2020 following the successful refund application

remaining deferred sale proceeds related to the fiscal 2020 sale of DNI.

We also extended loan funding of $1.0 million to V2 and $0.2

million to Revix.

Cash flows from financing activities

1 unchanged sentence

million from our South African overdraft facilities to fund

our cash management business through Connect and repaid

$547.3 million of these facilities.

repaid $199.6 million of these facilities.

We utilized approximately

$23.7 million of our long-term borrowings to fund the acquisition

capital expenditures

working capital

requirements.

repaid approximately

$20.1 million

accordance with our repayment schedule as

well as to settle

a portion of our revolving credit

facility utilized.

We received $0.1

from the exercise of stock options.

We also paid $1.5 million to repurchase shares from employees in order for the

employees to settle

taxes due related to the vesting of shares of restricted stock.

During fiscal 2023, we utilized approximately $520.1 million

from our South African overdraft facilities to fund our ATMs

our cash management business through Connect and

repaid $547.3 million of these facilities.

We utilized approximately $24.4 million

2 unchanged sentences

$10.5 million of our

revolving credit facilities,

fund our merchant

finance loans

revolving credit facilities, fund

our merchant finance

receivable business, and to fund the acquisition of certain capital expenditures.

23 unchanged sentences

also received $0.8 million from the exercise of stock options.

During fiscal 2021, we utilized approximately $360.1 million

from our South African overdraft facilities to fund our ATMs

repaid $365.4 million of these facilities.

Contractual Obligations

63 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis